Tanzania

United Republic of Tanzania (Central

Intelligence Agency, 2019)

Population 55m.

Official languages Swahili, English

Religions Christianity, Islam, others Capital Dodoma

Area 947 300 km^2

Currency Tanzanian Shillings (TZS) President John Magufuli

Tanzania is located on the coast of East-Africa, between Kenya in north and Mozambique in south, and have a population of around 55 million people (Central Intelligence Agency, 2019).

The United Republic of Tanzania is a union between the mainland Tanganyika and the islands of Zanzibar. Tanzania is a popular travel destination due to its beautiful beaches and rich wildlife.

The country has a tropical climate, with a short rain period in November-December and a long rain period in March-May.

There are more than 120 different tribes in Tanzania, with respectively about equal numbers of languages (Central Intelligence Agency, 2019). Each tribe speaks their own language, making

9

Tanzania have about 130 different languages. Even though most people in Tanzania speak their tribe language as their first language, only Swahili and English are official. Swahili, also called Kiswahili, is a bantu language spoken by many countries in east Africa, including Mozambique and Kanya.

The official capital in Tanzania is Dodoma, but Dar-es-Salaam is the largest and economically most important city with a population of more than 5 million (Central Intelligence Agency, 2019). Tanzania has a young and predominantly rural population, with a median age of 17.4 years and an estimated 66.8% of the population living in rural areas.

Before the colonial period in Africa, Tanganyika did not exist as a political unit (United Nations, 2018). A range of different-sized tribes lived in the area, and multiple small kingdoms were located around Lake Victoria. In the late 1800s, Germany and Great Britain shared East Africa between them. Tanganyika became a part of German East Africa, while Zanzibar became a part of the British Empire. In 1920, after World War 1, the British also took control over Tanganyika.

Tanganyika remained under British control until 1961 when it gained its independence, while Zanzibar gained independence two years later, in 1963. In 1964, the United Republic of Tanzania was formed by the two states Tanganyika and Zanzibar.

2.1.1 Politics

Julius Nyerere established the party Tanganyika African National Union (TANU) in 1954, and he became the first president when the country gained independence in 1961 (The Economist, 2017). Nyerere was inspired by Marxism and feared ethnical conflicts, therefore the country started out as a one-party state. Despite some improvements in education and health services, the country was one of the poorest in the wold when Nyerere resigned in 1985. In 1977, TANU and Afro-Shirazy Party, the only political parties in Tanzania, merged to form Chama Cha

Mapinduzi (CCM). Tanzania changed their constitution to allow multiple parties in 1992, but CCM has been the dominant party and has won every election since its establishment in 1977.

The current president is John Magufuli, who has been in office since 2015 (The Economist, 2017).

10

Tanzania is divided into 26 regions (mikoa) and 99 districts (wilaya) (Embassy of the United Republic of Tanzania, 2019). Each district has at least one council, created to further increase local authority. On a more local level, the districts are divided into wards, which are again divided into villages. The government is present in the local community through ward officers.

In addition, each village has a village leader that represents the villagers.

Corruption is a widespread problem in all layers of society among African countries, including Tanzania. According to Transparency International, Tanzania was ranked as 99 out of 180 on the Corruption Perceptions Index for 2018, with a score of only 36/100 (Transparency International, 2018). However, President John Magufuli has started a war on corruption since he was elected to office, and it seems to have given results. In a comprehensive study published by Transparency International, they have looked at the current state of corruption in African countries

(Transparency International, 2019). The participants in the study were asked if they felt any change in corruption over the past 12 months. In 2015, 66% thought corruption had increased and only 13% thought it had decreased. In 2019, only 10% thought it had increased, while 72%

thought it had decreased. Even though the fight against corruption has improved, it is still a long way to go. The sector where most Tanzanians experience corruption is in the legal sector.

Corrupt police and courts are giving the population limited legal protection, which is essential in any developed country.

2.1.2 Cooperatives

Cooperatives are people-centered enterprises owned, controlled and run by and for their

members to realize their economic, social and cultural needs and aspiration. They exist all over the world, and an estimated 12% of the world’s population are members of cooperatives (National Cooperative Business Association CLUSA International, 2019). Tanzania has a long story of cooperatives. Informal cooperatives were started by peasants already in 1925 to capture a part of the trade profit for their crops (Maghimbi, 2010). The Kilimanjaro Native Cooperative Union (KNCU) was established in 1933 as the first cooperative union consisting of 11

cooperatives producing coffee. By 1968 had the largest cooperative movement in Africa and the third largest in the world. Both the colonial and the independent government had been supportive of the cooperative model.

11

Traditionally, the type of model that has been dominant in Tanzania is the one that has focused on marketing of peasant’s agricultural crops and is known as the Chayanovian model (Chayanov, 1919). This model was published in 1919 by Russian agrarian economist Alexander V.

Chayanov. In this model peasant crop marketing cooperatives dominate, and it considers situations of developing countries where millions of peasants dominate. Chayanov was

especially interested in organizations and how cooperatives would help the peasantry to not be overrun by large scale production organizations. According to Chayanov, the cooperative advantage is that it can advance the position of the poor without making any special changes in the economic equilibrium and without destroying the organizational plan of the small-scale rural economy (Chayanov, 1919). Large-scale production has undoubtedly an advantage when it comes to certain technical activities, but Chayanov believed that this could be organized in cooperatives to level out the playing field. For example, farmers could go together and hire a car to transport their products to the market, instead of going alone. This would neutralize the advantage of the large-scale farmers on that particular input cost. Other examples of this model can be found in Russia before the revolution in 1917, as well as in present day India. The Chayanovian model was dominant in terms of members and volume of trade in Tanzania since the beginning in the 1920s until they were abolished in the 1970s.

The cooperatives in Tanzania were owned and ran by the farmers until the late 1960s. At the end of the 1960s, the government got engaged in the cooperatives by having government employees overlook the cooperatives, and they started taking a fee from the farmers who used the

cooperatives (Maghimbi, 2010). The farmers did not respond well to this. The fee decreased the farmers’ profit, and it also led to lack of trust in the cooperative model. This led to apostasy among many of the farmers, which started a trend to abandon the cooperatives. When many of the farmers stopped bringing their produce to the cooperatives, the quantity went down making many buyers who approached the cooperatives leave empty-handed, or with less than they intended to buy. The trend continued into the 1970s when the cooperatives were abolished by the government (Maghimbi, 2010).

12

2.1.3 Villagization

Many African countries can be characterized by the abundance of land and low population density (Osafo-Kwaako, 2011). Because of this, central authorities have often struggled to broadcast their power throughout their territories. Scattered population limits the state’s ability to raise taxes, defend its territorial boundaries, and to provide public services. In addition, the scattered hinterland population also tend to avoid the control of central governments. According to Alexander Chayanov, peasants in pre-capitalist countries are primarily concerned with

subsistence production, catering to the needs of their household, and preserving their traditional forms (Osafo-Kwaako, 2011). However, many farmers in countries with similar demography are dependent on the market and the state for survival. Smallholder farmers in Africa have land in abundance and regular rain which kept them from being dependent on the state. This made it difficult for the authorities to bring rural communities under state administration.

The government made an attempt to raise taxes from the smallholder farmers in rural areas by introducing a fee through the cooperatives. The attempt on raising taxes from rural areas through cooperatives was unsuccessful due to the abolishment, leading to a government experiment to strengthen local authority. Starting in 1973, a number of development villages were created in rural areas of the country (Osafo-Kwaako, 2011). The villages were created to concentrate the rural population and introduce local authorities in the shape of village councils. The village councils were responsible for collecting taxes, enforcing property rights, and provide public services. The program ended in 1982 following the commencement of an IMF economic liberalization program. The villagization program was criticized by James C. Scott, who described it as a failed example of large-scale state planning with adverse economic and

ecological consequences for peasants (Scott, 1999). Even though the villagization program was abolished in 1982, it is still possible to see the effects in the rural communities today. The rural areas are organized in villages and every village has a village leader. The organizational history of the rural communities will be useful knowledge in the evaluation later in the study.

2.1.4 Economy

Tanzania has a mixed economy with an active private sector. The government remains heavily involved in some industries, including telecommunication, banking, energy and mining. In the

13

first decade of the 2000s, Tanzania had an economic growth averaging 6.7% per year, which was well above the region average, and one of the highest in Africa (The World Bank, 2019). The country is still experiencing economic growth, but it has cooled off over the past few years.

Financially, 2018 was a mixed year for Tanzania. Inflation remained low and stable at 3%, and the shilling also remained stable. However, foreign direct investment has declined from high levels in 2014, when it accounted for 5% of GDP¹, and export growth has stagnated. The

national poverty rate has declined steadily from 34.4% in 2007 to 26.8% in 2016, but the number of poor people in absolute terms remains the same due to population growth.

Agriculture is by far the biggest sector of the national economy, employing two-thirds of the population (Oxford Business Group, 2018). Coffee and cotton are the most important export cash crops, but other exports include cashew nuts, tea, tobacco, and sisal (OEC, 2017). Despite

employing two-thirds of the population, agriculture export accounts for only a fifth of the total exports. The single most exported good is gold, which made up 29% of total exports in 2017 (OEC, 2017).

The country has considerable potential for economic development, mostly due to the abundance of natural resources like minerals and natural gas (Britannica, 2019). It is expected that the access to natural resources will increase the income rapidly, and the government wants to use this to industrialize the country. The Tanzanian government has ambitions of becoming amiddle income country (MIC) by 2025 (Moyo, Simson, Jacob, & de Mevius, 2010), and their reported GNI² per capita for 2018 was US$1,020 (The World Bank, 2018). The World Bank currently defines MICs as countries with a GNI per capita ranging from US$1,026 to $12,475 (The World Bank, 2019), which means they are close to achieving their target ahead of time. However, the country has considerable challenges related to poverty, access to healthcare, quality of education, weak infrastructure, and low productivity.

Tanzania has been one of the most important countries for Norwegian development cooperation for decades (NORAD, 2018). The aid cooperation between Tanzania and Norway has been going since their independence in 1962, and Tanzania has for decades been the largest receiver of aid from Norway. In 2018, Tanzania received NOK 397.3 mill. in aid from Norway. The aid was

1 Gross Domestic Product

2 Gross Net Income

14

spread across multiple sectors, including agriculture, renewable energy, health and education.

Norwegian aid is managed by the Norwegian Agency for Development Cooperation (NORAD).

2.1.5 Agriculture

The Tanzanian government is focusing on agriculture as one of the main sectors to achieve economic growth. This is because the agriculture sector accounts for almost one-third of the country’s GDP and employs two-thirds of the population (Oxford Business Group, 2018) (Oxford Business Group, 2018). Smallholder farmers in Tanzania are facing several challenges, including the following:

• Infrastructure deficits that limits access to domestic and international markets

• Limited access to high-yielding inputs such as seeds and fertilizer

• Limited irrigation and dependency on rainfall

• Poor access to credit

• Limited knowledge in general and in their respected fields

These constraints are keeping a large part of the country’s farmers from being included in the major value chains, and it is one of the reasons why the country has been unable to exploit its abundant agricultural resources.

Many initiatives have been started by the government and other private organizations to

overcome the challenges and improve the value chains. Similar projects to the FVC project have been carried out in Tanzania and other Sub-Saharan countries for years, and the FVC project is based on experiences from these projects. A methodological guide prepared for the World Bank in 2007 takes on various tools that can be used to improve value chains (Webber, 2007). It discusses several case studies, with focus on how they managed to strengthen the value chains through different types of interventions. Developing value chains in the developing countries in Sub-Saharan Africa is not easy, as there is a wide range of challenges to face. What may seem to work in one place, may not work in a different setting in a different country. However, we can use the acquired knowledge from these projects to constantly improve the accuracy of the interventions, and further use this to develop stronger value chains in SSA and other regions.

15